What GAO found
One option that may be available to those who lose their job with employer-sponsored insurance (ESI) during the COVID-19 pandemic are short-term plans, which can cover certain health costs. These plans are generally not subject to the federal requirements for individual health insurance set out in the Patient Protection and Affordable Care Act (PPACA), such as restrictions on basing premiums on pre-existing health conditions and the requirement to cover 10 basic health benefits. Federal requirements for short-term plans are primarily limited to defining their duration - the length of time a consumer can be covered by them. States have broad powers and discretion in regulating short-term plans, and regulating short-term plans varies from state to state. For example, some states have banned their sale, and some have imposed restrictions in addition to federal requirements.
GAO found that limited and inconsistent data hindered understanding of the role of short-term plans during the COVID-19 pandemic for those who lost ESI, for example, whether consumers used them as temporary coverage or as a long-term alternative to PPACA-harmonized plans. Policy researchers and representatives of national organizations interviewed by GAO said there was a lack of comprehensive data and information on short-term plans, including data on how many people enroll in them and for how long. In addition, data collected on short-term plans varied across the six states reviewed by GAO.
- Two countries did not have data on enrollment in the short term.
- Three states reported fewer than 10,000 enrollments in short-term plans, and trends varied as to whether enrollment increased or decreased.
- One country did not offer short-term plans from 2019 to 2021.
Government officials in five countries with a sales plan were unable to report on the role of short-term plans for consumers, as none of them collected data on the duration of coverage by short-term plans.
Attitudes differ greatly on the value of short-term plans for consumers. Officials from two of the six states reviewed by GAO and other actors interviewed said short-term plans meet an important need for certain consumers who lost ESI during the COVID-19 pandemic. They said short-term plans provide additional options for certain consumers, such as those who need temporary insurance until they are re-employed, and those who cannot afford insurance premiums for PPACA-compliant plans. In contrast, officials in two other countries and some other policy researchers said short-term plans do not provide good value for consumers. While most GAO interviewees said that short-term plans often had lower premiums than PPACA-compliant plans, some also pointed out that short-term plans (1) provide fewer benefits, (2) are not available to those with pre-existing conditions, and (3) may result in higher out-of-pocket costs for some consumers compared to PPACA-compliant plans. In addition, unlike PPACA-compliant plans, short-term plans are not subject to federal requirements to provide consumers with key information about their benefits that would facilitate comparison with other options.
Why GAO did this study
Millions of Americans who lost their jobs during the COVID-19 pandemic also lost their ESI. Short-term insurance was one of the options for these consumers. However, these plans may differ significantly from other health coverage options for those who lose ESI. Therefore, it is important to understand the role they play in the market and for individual consumers.
GAO was responsible under the Corona Virus Aid, Assistance and Economic Security Act to monitor the federal government’s response to the pandemic. In this report, GAO describes what is known about short-term plans and the role they could play for individuals who lost ESI during a pandemic. Stakeholder views on the value of short-term plans in meeting consumer needs are also considered.
GAO conducted a literature search and review of studies on short-term plans and conducted interviews with national organizations such as the National Association of Insurance Commissioners. GAO also interviewed seven policy researchers selected to include different policy perspectives and stakeholders. This included (1) officials from six state insurance departments selected to represent different levels and types of regulations, and (2) representatives of four organizations selling short-term plans.
Contact John E. for more information. Dicken at (202) 512-7114 or [email protected]